Cysco Corp Has a Budget of $1,207,000 in 2017 for Prevention

question 126

Multiple Choice

Cysco Corp has a budget of $1,207,000 in 2017 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $109,000 in variable costs. The new method will require $50,300 in training costs and $144,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 202,000 units.
Appraisal costs for the year are budgeted at $501,000. The new prevention procedures will save appraisal costs of $50,100. Internal failure costs average $36 per failed unit of finished goods. The internal failure rate is expected to be 5% of all completed items. The proposed changes will cut the internal failure rate by one-half. Internal failure units are destroyed. External failure costs average $56 per failed unit. The company's average external failures average 4.1% of units sold. The new proposal will reduce this rate to 2%. Assume all units produced are sold and there are no ending inventories.
How much do external failure costs change if all the changes are as the new prevention procedures anticipated? Assume all units produced are sold and there are no ending inventories.

• A) $279,576 decrease
• B) $237,552 decrease
• C) $226,240 decrease
• D) $254,520 decrease

Understand the importance and impact of interest rates on credit.

Learn about the impact of credit on the economy.

Recognize the specific vulnerabilities different groups of people have towards credit misuse.

Understand the legal framework surrounding consumer credit and rights.

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Definitions:

Consequentialist Approach

The consequentialist approach in ethics focuses on the outcomes of actions, suggesting that the morality of an action is determined by its consequences.

Policies

are formal guidelines or strategies designed to guide decisions and actions within organizations, governments, or other entities.

Principle Of "Double Effect"

An ethical theory that allows for actions which cause serious harm as a side effect of promoting some good end, under certain conditions.